Property letting vs business activity: tailored godown construction did not justify firm registration.

Constructing godowns to a tenant's specifications and then leasing them, with only incidental amenities such as electricity, water supply, approach roads and fencing, was treated as ordinary property letting rather than a separate business activity. The fact that the buildings were tailored for the tenant did not alter their character, and the absence of substantive business operations after construction was decisive. On that basis, the activity was held not to constitute business, and the group was not entitled to registration as a firm.

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Issues: Whether the assessee's activity of constructing godowns to the specifications of the tenant and thereafter letting them out constituted a business so as to entitle the group to registration as a firm.

Analysis: The arrangement showed construction of godowns for letting them out on lease, with only incidental services such as electricity, water supply, approach roads and fencing. These features were found to be normal incidents of property letting and not separate business activity. The fact that the property was constructed to suit the tenant's specifications did not change its character. The authorities relied on by the assessee were distinguished on facts, and the absence of any substantive business operations after construction was held to be decisive.

Conclusion: The activity was not business activity, and the assessee was not entitled to registration as a firm.

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